AusPost killing us

Baden Kirgan
| Sep 21, 2017

Kirgan’s long-time admiration of the national postal service is souring

One of the things my wife criticises me for most is that I do not give up on things. You may think that is an admirable quality, the stuff of Churchill, the spirit that makes a man a man. But that is not what she means.She means that I persist a long time past when other people give up because things have turned to crap, like the TV shows Lost and Twin Peaks.

And so it is with Australia Post. Despite the odd misgiving over the years I have been a big fan. People complain about the postal service, but I have often been taken with the miracle that is Post’s ability to get a letter from my factory to anywhere in this enormous country for less than a dollar.

Yes the price rises have annoyed me and impacted my business, and yes the two-speeding of their service has caused me problems, but to me they have had an arguable point. To deliver mail everywhere in Australia, they need to maintain a certain overhead, and that has not changed, while volumes have decreased dramatically. Simple maths tells you in those conditions prices need to rise.

But I am starting to get turned off Post. Price rises in an era of declining mail I understand – abusing your position as a monopoly is another.

It is a foundational truth of almost all strains of economics that monopolies are bad. Companies cannot be allowed that power without something to restrain them. Usually that is competition, but the monopoly has none, which is why in the West we only allow monopolies owned by the government.

Government owned monopolies like Australia Post may not have to worry about competitors, but the people in charge (ie the government) have to keep them under control lest they abuse the consumer, aka, the voter.

Governments since the 1980s have latched onto the neo-economic idea of privatisation, partly because of the money that could be raised, but also because it freed your local MP from having to listen to complaints about Telecom or CBA. It was a win-win for the average backbencher.

Of course Australia Post has never been privatised, but it did get to the first stage, corporatisation. Corporatisation is to privatisation what beatification is to sainthood – the first step in a long process. There are some great reasons to corporatise government bodies like Post – it can improve their efficiency, make them self-reliant and ready for sale, and less likely to fall prey to dodgy government influence.

But it also makes a monopoly neither fish nor fowl – unconstrained by either competition and the market, or by direct government oversight.

It is this weird zone of all power and no responsibility that has given AusPost a lot of freedom – the massive price increases, the shift from mail to parcels, and the thing that has really disappointed me, their commercial terms.

If you do not deal with Post on an account basis here is something you may find shocking. Their payment terms are 14 days – and they mean it. Do not pay and they start chasing you, and will quickly stop accepting mail. My own relationship with the Post accounts team has been great – they have helped me a lot, but rules are rules and I have never let my account go past 28 days.

They used to encourage early payment by giving you a 2.5 per cent early payment rebate. They also did not charge Amex fees, allowing me to make a small fortune in Amex points and rebates for a while. But when the current management came in they imposed a 2 per cent plus fee on Amex, and reduced the rebate to 1 per cent, ruining that piece of fun.

Last month I got a letter from them with their new terms. The 1 per cent rebate is gone altogether. All that does is provide no incentive to pay early but if they’re ok with that it is up to them.

They have also changed the late fee from a flat $15 per month, to $5 per late invoice per month. That is going to affect people who mail a lot of jobs each month, in other words their biggest and most active customers. Not what I would do, but AusPost is bigger and smarter than me so ok.

And the doozy – they are now charging interest at 0.02 per cent on any late balances. It does not sound like much, but let’s have a quick refresher – these invoices are late on day 15. If you are like me, you probably struggle sometimes to get your invoices out the door in 14 days, but if you spot postage for clients you are going to have to make a special effort, lest you start paying interest to the federal government.

Paying interest to the federal government for terms no organisation run in a competitive market could get away with. That is where we are at with these new terms, and it is outrageous, but more than that, disheartening.

I know print is in decline and I know that in my lifetime there is going to come a day where the industry I have spent decades in will probably collapse into something no one could call print, but why are we doing it to ourselves? Australia Post is part of our industry whether they like it or not – why are the unable to see that by killing us with these prices and these terms, they are also killing themselves?

And the affront is that it is the government doing it. Never forget this stuff is ultimately the responsibility of the Prime Minister, at least until he sells Post off.

The federal government is trying to put us all out of jobs for what? There is still demand for print and mail – yes it is not what it was, but we are smart and resilient and we can make it work. I do not want handouts from the government – I would never take them if they were offered – but I would really love it if they would get off our back.

Despite it all I am still not ready to give up on Post. I want them to come up with a model that makes sense for them, but it also has to make sense for us. I do not think this is it.